Buy Zalicus For A 120% Upside

 |  About: EPIRUS Biopharmaceuticals, Inc (EPRS), Includes: ARNA, MDT, MRK, NVS, OREX, SNY, THLD
by: Jorge Aura

Yesterday Zalicus (ZLCS) had a short attack with only 600k shares. The range of the day was between 1.28 low and 1.52 max. During the day more than 6MM of shares were negotiated. So the daily average volume of 3.51MM shares was almost doubled. The stock showed an upside of 90,14% in the last four months. According to analyst opinions and pipeline studies as you will see in the table included in this article, the expected target price will reach $3 in 12 months, with a considerable upside of 120% . In my previous article, I presented four reasons for buying Zalicus. In this article, I am going to expose the new changes as well as the news carried out during that time.

Zalicus Inc. discovers and develops treatments for pain and immuno-inflammatory diseases. An important component of the company's business strategy is collaboration. Zalicus forms collaborations with pharmaceutical and biotechnology companies, as well as U.S. government agencies, to support the development and marketing of select product candidates generated by their discovery technologies.

This small pharmaceutical company has agreements with major companies in the sector, such as Covidien (COV), Novartis (NYSE:NVS), Sanofi (SNY), Hydra biosciences and the U.S. Army Medical Research Institute for Infectious Diseases.

Pipeline portfolio:

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Synavive is a product candidate with a novel mechanism designed to enhance the anti-inflammatory benefits of glucocorticoids without the associated dose-dependent side effects. Developed in a uniquely engineered formulation, Synavive is comprised of the cardiovascular agent dipyridamole, and very low dose of the glucocorticoid prednisolone. Synavive is thought to act through a novel multi-target mechanism of action in which dipyridamole selectively amplifies prednisolone's anti-inflammatory activities without increases in adverse effects typically associated with higher doses of glucocorticoids.

Synavive is in Phase II clinical development and has demonstrated anti-inflammatory effects, rapid onset of action and tolerable safety profiles in clinical studies to-date including rheumatoid arthritis.

About 20 million people in the United States are believed to have rheumatoid arthritis. The market potential is significant and Synavive won't have any problems when it is compared with other similar drugs.

Synavive's estimated market could be between to $14B/year.

The estimated study completion date is in September 2012.

Clinical trial: A Phase II Trial Comparing Z-102 With Placebo In Patients With Moderate To Severe Rheumatoid Arthritis (Synergy)

(Source Clinical Trial)


Z160 is a first in class, oral, state dependent, selective N-type calcium channel (Cav 2.2) blocker. Z160 has demonstrated efficacy in multiple animal models of neuropathic and inflammatory pain, suggesting that Z160 has the potential to treat a broad range of chronic pain conditions. In addition, Z160 was well tolerated in previously conducted clinical trials involving over 200 subjects. N-type calcium channels have been recognized as key targets in controlling pain because of their key role in transmitting pain through the spinal nerves to the brain. Zalicus has utilized its expertise in this field to successfully discover high affinity, selective and orally available compounds, such as Z160, that show promise for further development as therapies for pain.

Yesterday, Zalicus initiates the first of two Phase IIa studies with Z160, a First-in-Class, Oral, State-Dependent, Selective N-type Calcium Channel Blocker, for the Treatment of Chronic Neuropathic Pain.

Z160's estimated market could be between to $30B/year.

The estimated study completion date is in September 2013.

Clinical trial: Phase II Efficacy Trial of Z160 in Lumbosacral Radiculopathy

(Source clinical trial)


Z944, is a novel, oral, T-type calcium channel blocker that has demonstrated preclinical efficacy in multiple inflammatory pain models. A Phase I clinical trial evaluating the safety and tolerability of Z944 is ongoing. If Z944 successfully completes this Phase I clinical trial, Zalicus is planning to advance Z944 into Phase II clinical development.

The wide distribution of T-type calcium channels found in, heart, endocrine cells and other tissues provides the possibility of developing therapeutics for multiple indications, including treatment of pain.

Z944 will advance into a Phase I multiple ascending dose study in the third quarter of 2012.

Partnered Programs

Exalgo (Covidien/Mallinckrodt)

The FDA approved the three existing doses of EXALGO (8, 12 and 16 mg) in March 2010. Mallinckrodt subsequently submitted the sNDA in January 2012 with post-marketing data to support the original application's compendium of clinical trials demonstrating safety, efficacy and tolerability. Using OROS technology, EXALGO provides a steady release of hydromorphone throughout the day once steady-state is achieved after three to four days. Additionally, EXALGO has physical properties that may make it difficult to extract the active ingredient using common forms of physical and chemical tampering, including chewing, crushing and dissolving.

The rights to EXALGO were acquired by Mallinckrodt LLC, the pharmaceuticals business of Covidien plc, in June 2009 for $15 million in upfront payments, additional development funding of up to $16 million and a $40 million FDA approval milestone payment. Zalicus receives tiered royalties on net sales of EXALGO by Mallinckrodt.

On 27 August 2012, Zalicus announced that the U.S. Food and Drug Administration has approved the supplemental new drug application filed by Mallinckrodt Inc., a subsidiary of Covidien plc, for the 32 mg dose strength of EXALGO (hydromorphone HCl) Extended-Release Tablets, for the management of moderate to severe pain in opioid-tolerant patients requiring continuous, around-the-clock opioid analgesia for an extended period of time.

Prednisporin (Sanofi)

Prednisporin is a topical ocular drug candidate that Zalicus has exclusively licensed to Fovea Pharmaceuticals SA, a division of Sanofi Aventis (NYSE:SNY), containing low doses of the glucocorticoid, prednisolone acetate and the immunosuppressant cyclosporine A. Fovea has developed a proprietary co-formulation of Prednisporin and is seeking to develop Prednisporin to treat inflammatory ocular diseases such as allergic conjunctivitis. Fovea has advanced Prednisporin into Phase IIb clinical development in subjects with persistent allergic conjunctivitis.

During 2009, Fovea investigated Prednisporin in a Phase IIa proof-of-concept clinical trial. Fovea has reported that on the primary endpoint of ocular itching, the Prednisporin combination with the higher dose of cyclosporine A is superior to placebo (p=0.048) and non-inferior to the higher dose of prednisolone acetate alone. The Prednisporin combinations were generally well tolerated and there were no serious adverse events reported.

This week Zalicus has been guaranteed the patent of Prednisporin.

News patents of Zalicus

In the following table, we will analyze the estimated annual sales of all the ongoing studies in Zalicus.

Synavive $
Z160 $
Z944 $
Partnered Programs (royalties) $100.000.000
Ion (cHTP research programs) $
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Total $ estimate annual sales
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The capitalization of Zalicus is only 170MM and the estimated annual sales are around $64B/year. If one of its ongoing studies is approved, the capitalization and its value could be multiplied by 10x or more. Synavive, Z160 and Z944 can make billions of dollars for Zalicus. Any company may be interested in buying Zalicus only by their studies. In the past it was rumored that Merck (NYSE:MRK) had offered $500MM for Z160. At current prices, Merck could buy Zalicus completely.

Chart Analysis and Comparative

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The Chart marks that Zalicus remains bullish. The red line indicates a possible change of trend if you exceed in the closing daily. The next key resistance is at $1.62.

Yesterday, Zalicus marked a similar candle to that carried out in companies such as Arena Pharmaceuticals (NASDAQ:ARNA), Threshold Pharmaceuticals (NASDAQ:THLD) and Orexigen Therapeutics (NASDAQ:OREX) before communicating positive results in their studies.

Comparative charts

Arena Pharmaceuticals

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Threshold Pharmaceuticals

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Orexigen Therapeutics

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Analyst Ratings

On 28 August 2012, analyst Canaccord Genuity Reiterates a "Buy" on Zalicus with price target of $3.00.

Zalicus: Analyst stock recommendations



Extremely important news such as Exalgo approval for dose of 32mg and the start of Phase IIa of Z160, have been very positive for all investors in Zalicus. The target price of Zalicus continues to be $3 for short term. In my opinion, Zalicus could be above two digits in a long-term.

Zalicus is a Strong Buy.

*Pipeline overview data sourced from Zalicus and Chart data sourced from stockcharts, all other data sourced from as well as the web of the previously mentioned company.

*Translator: Rut Aznar.

Disclosure: I am long ZLCS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Investors buy and/or sell at their own risk. I declare that I may day-trade any stock at any time mentioned in this article. For me "long" is until I sell and few tell you that. I do not "short" stocks and few tell you that too. I also get paid one penny per view from SA and other than being published by SA and my own private stock account, I have zero connection to Wall Street and few tell you that too.